HealthSouth Ex-Treasurer Says
He Found Fraud, Told Scrushy

Murphy Met With His Boss
About 'Fabricated Earnings'
In 1999 and Quit Soon After

By

Dan Morse and

Evelina Shmukler Staff Reporters of THE WALL STREET JOURNAL

Updated Feb. 17, 2005 12:01 a.m. ET

BIRMINGHAM, Ala. -- A former treasurer at HealthSouth Corp. testified that he told company founder Richard M. Scrushy about "fabricated earnings" during a 1999 meeting in Mr. Scrushy's office.

The testimony by Leif Murphy was intended to bolster the federal government's contention that Mr. Scrushy knew about the $2.7 billion accounting fraud at HealthSouth despite his insistence that the scheme was carried out by...